### Market Mechanics #### [Price](https://tradingeconomics.com/commodity/aluminum) ![[Pasted image 20210717215400.png]] > To understand beta / correlation & price action b/w [[Alcoa]] and $SPX, Volksawagen, Vinci (Largest Automotive & Construction Company by Market Cap), Gold, $DBC ![[Pasted image 20210724185118.png]] ![[Pasted image 20210724185354.png]] ![[Pasted image 20210724185614.png]] ##### Supply Dynamics - Oversupply exists of primary aluminium in 2021 w/ absolute production > consumption, w/ a narrowing surplus - **China**'s production growth will slow down w/ stricter government regulations taking higher-cost and less efficient capacity offline. - Though will still remain the Global Production Driving Force. They have a **45mt cap on production**. - Controls for energy instenisty per GDP and energy emissions in particular regions will lead to **Chinese primary production plateauing and disrupting production** - China is thus importing more aluminium this year, competing w/ other nations for supplies - Risk of the upside the metal faces as China could ease curbs on import of aluminium scraps as they look for more secondary supply - Supply shortage is seen rising to 1.08 million tonnes in 2023. - Secondary supply had to grow at a** compounded annual growth rate of 5.8%**, which is higher than primary aluminium supply. ##### Demand Dynamics - Forecast to increase from 64.2-million tonnes in 2021 to 78.4-million tonnes by 2029, (approx. 20%) --> **averaging 2.6% annual growth.** - Steady demand growth in Asia - **The US** is the largest global importer of aluminium. Protectionist policies could potential distruptive global trade flows - **India** to be stand out growth market w/ long term growth prospects for the construction considering an infrastructure deficit and gov support. - **4x Increase **from 2.7-million tonnes in 2021 to 8.7-million tonnes by 2029. - Automotive and Aerospace to prefer lighterweight aluminium to steel - World aluminum demand grew at an average **annual rate of 4.1%** between 2014 and 2019, largely supported by increased demand in China and key sectors such as construction and transportation. > Feature is that demand seems to fluctuate greatly as per the economic growth of China ![[Pasted image 20210718121203.png]]